Facebook Contributions Surprise Shareholders

In a surprising move, Facebook shareholders filed a notice with the U.S. Securities and Exchange Commission (SEC) on Tuesday that challenged Facebook for donating money to politicians, who deny climate change, are anti-online freedom and anti-gay rights, in direct conflict with the company’s public image. According to NorthStar Asset Management group, which holds more than 55,000 Facebook shares, some of the sizeable political contributions made by the giant social media company don’t reflect their public position on controversial issues, which include gay rights, the environment and Internet freedom.

The SEC filing states that such contributions to individuals and groups, whose beliefs on these issues are in stark contrast to that of the company’s public image could be potentially detrimental. The shareholders worry that such disparity might be perceived as bait-and-switch by the public, thus undermining the company’s image, value and business model.

The numbers reported in the SEC filing are startling. As recently as last year, Facebook’s political action committee (PAC) donated a third of its moneys to candidates who deny climate change. These politicians support the deregulation of greenhouse gas emissions ,and oppose the American Clean Energy and Security Act of 2009. For all its public support for green energy and renewable resources, Facebook also gave out $25,000 to the ultra-conservative Competitive Enterprise Institute (CEI), which ran ads about carbon dioxide with the tagline, “They call it pollution. We call it life.” Facebook is also on the technology task force of American Legislative Exchange Council (ALEC), a free market lobbying group, which is actively trying to dismantle state renewable energy and climate laws.

NorthStar also asserts Facebook’s PAC gave 41 percent of its moneys to politicians, who are openly opposed to gay rights and have voting records that confirm their position. According to the NorthStar filing, the donations totaled a sum of $156,000 since 2012. And yet, 2013 saw Facebook Founder and CEO Mark Zuckerberg marching in the San Francisco Gay Pride Parade. Additionally, the social media website has recently new gender identity options to include more of the LGBT community.

Additionally, Facebook also seems to be on shaky ground when it comes to Internet freedom. The PAC contributed $80,000 to three politicians, who sponsored or co-sponsored the Stop Online Piracy Act (SOPA) and Protect IP Act (PIPA) legislations, both of which have been accused of countering online free speech and innovation. This is in direct contrast to Zuckerberg’s public perception as a champion of free and widespread Internet access. He has criticized these laws are being overly censorious and chockfull of government oversight, both deemed harmful to the free flow of information on the Net. Indeed, he has blogged about calling President Obama to vent his “frustrations” about government surveillance programs.

The emergence of Facebook’s donations to politicians and groups that deny climate change, are anti-gay rights, or are anti-online freedoms has surprised and alarmed their shareholders. This is more so in the aftermath of the brouhaha raised after reports emerged that the recently appointed Mozilla CEO Brendan Eich had supported California’s anti-gay marriage law in 2008. Even though Eich’s contributions had been personal, his stance against gay marriage resulted in calls for boycotting Mozilla. The public outcry ultimately led to his resignation.

Shareholders fear that Facebook’s “incongruent contributions” could cause Mozilla-like alienation by customers and advertisers, which would adversely impact company value. According to NorthStar CEO Julie Goodridge, Facebook needs to follow the footsteps of Apple, IBM, and Google, and adopt a clear contribution policy that will allow the public and shareholders alike, to see the allocation of money. The proposal to create such a policy is up for a vote at Facebook’s second annual stockholder meeting, scheduled for May 22.

Facebook defended its position and released a proxy statement, which asked its shareholders to turn down the NorthStar proposal. They stated that the company has “…practices…to ensure the appropriate disclosure and oversight of our lobbying and political activities.” According to Facebook, the proposal has operational elements that are too unwieldy to apply, are not required by the law, and are not standard practices.

Whether they make their policies transparent or not, the company appears to be courting controversy and public ire. Irrespective of mass perception, shareholders contend that Facebook’s surprising contributions to those who openly deny climate change and call it a hoax, are anti-gay rights, and are anti-online freedom, are tinderboxes waiting to ignite.